- US Dollar sets a new 3-month high on the taper announcement
- The greenback index also temporarily fell to a 4-day low on Bernanke comments
A look back at the past 24 hours of Forex trading using movements in the US Dollar Index:
US Dollar 15-Minute 12:00 12/18 to 10:00 12/19 EST
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The Fed’s surprise decision to taper its monthly asset purchases by 10 billion US Dollars had the obvious bullish impact on the Dow Jones FXCM Dollar Index, but not without first hitting a few bumps along the way.
The greenback immediately rallied on the news that the Fed would taper its pace of QE3 purchases, and the index broke 1 point above the previous 3-month high. However, those gains were quickly unwound, as bullish dollar traders may have been taking profits.
Then, Fed Chief Bernanke stressed at a press conference that the FOMC only sees 6.5% unemployment as a threshold, and it may be some time past 6.5% until the Fed raises the interest rate. The comments sent the US Dollar to a new 4-day low. However, Bernanke’s talk of further plans to taper stimulus in the coming months sent the greenback to new daily and 3-month highs.
The US Dollar traded somewhat quietly during the overnight and London sessions, as economic releases were minor during those hours.
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Charts created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .